Technological Opportunity, Technological Leadership Change, and Latecomers’ R&D Resource Allocation between Innovation and Imitation

44 Pages Posted: 9 Mar 2020

See all articles by Sungyong Chang

Sungyong Chang

London Business School; Columbia University - Columbia Business School, Management

Hyunseob Kim

Jackson State University

Jaeyong Song

Seoul National University - College of Business Administration

Keun Lee

Seoul National University - School of Economics; CIFAR

Date Written: February 14, 2020

Abstract

This study examines when and how latecomers can surpass incumbents in technological capabilities with a focus on the role of technological opportunity. There is disagreement in theoretical prediction and evidence on whether technological opportunity is conducive to technological leadership change. To reconcile this disagreement, we build a computational model of Schumpeterian competition in which incumbents and latecomers compete with innovation and imitation R&D. First, the results suggest that technological opportunity indeed has two opposing effects (i.e., positive and negative) on technological leadership change, and these effects create an inverted-U relationship. When there are few opportunities, leadership change is unlikely to happen because latecomers will rarely achieve a breakthrough. Additionally, abundant opportunities may not be conducive to leadership change either because incumbents move forward faster than latecomers. We further examine why these opposing effects exist by exploring latecomers’ R&D allocation between innovation and imitation. The results highlight that imitation R&D is a necessary condition for latecomers to leverage technological opportunity (i.e., enabling the positive effect of technological opportunity) and overcome their disadvantages in a technologically munificent environment (i.e., mitigating the negative effect of technological opportunity).

Keywords: Schumpeterian competition, Technological opportunity, Technological leadership change, Imitation, Innovation

JEL Classification: O31, O32

Suggested Citation

Chang, Sungyong and Kim, Hyunseob and Song, Jaeyong and Lee, Keun, Technological Opportunity, Technological Leadership Change, and Latecomers’ R&D Resource Allocation between Innovation and Imitation (February 14, 2020). Available at SSRN: https://ssrn.com/abstract=3538041 or http://dx.doi.org/10.2139/ssrn.3538041

Sungyong Chang (Contact Author)

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

Columbia University - Columbia Business School, Management ( email )

3022 Broadway
New York, NY 10027
United States

Hyunseob Kim

Jackson State University ( email )

1400 John R. Lynch Street
Jackson, MS 39217
United States
6019791367 (Phone)

Jaeyong Song

Seoul National University - College of Business Administration ( email )

Seoul, 151-742
Korea, Republic of (South Korea)

Keun Lee

Seoul National University - School of Economics ( email )

San 56-1, Silim-dong, Kwanak-ku
Seoul 151-742
Korea

CIFAR ( email )

180 Dundas Street West, Suite 1400
Toronto, Ontario
Canada

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